Peripheral blood lymphocytes grown in the presence of high doses of interleukin-2 (IL-2) acquire the ability to lyse tumor cells. This cytolytic activity is not restricted by antigens encoded in the major histocompatibility complex (MHC) and is observed with a variety of both autologous and allogeneic tumors. This activity has been called lymphokine-activated killing (LAK) and has been used in clinical treatment of tumors. The origin of cells with LAK activity and the mechanism by which they recognize and kill their targets are unknown. More than 20 clones isolated from human peripheral blood were analyzed for their ability to lyse fresh tumor cells and for their cell-surface phenotype. Most of the clones with LAK activity had the CD3-CD4-CD8-CD16+ phenotype. Populations of cells with this phenotype were purified by a combination antibody-mediated complement killing and cell sorting with the fluorescent-activated cell sorter. RNA extracted from clones and enriched populations of cells with LAK activity was analyzed by hybridization with DNA probes for the presence of transcripts derived from the CD3 and TCR genes. Absence of mature transcripts from the CD3 gamma, CD3 delta, TCR beta, and TCR gamma genes showed that recognition of tumor cells was not mediated by the known CD3-TCR alpha-beta or gamma-delta complexes. Interestingly, all CD3- cells with LAK activity expressed the CD3 epsilon and TCR delta genes. This finding identified these cells as members of an early stage in the T-cell lineage. Expression of genes encoding various lymphokines in activated CD3-CD4-CD8-CD16+ cells was measured. The pattern of lymphokine expression was also consistent with an early stage of T-cell maturation. These studies identified for the first time that cells with LAK activity belong in the T-cell lineage; and furthermore, that they represent the earliest known stage in T-cell differentiation.